Oceanbulk Shipping & Trading SA v TMT Asia Ltd & Ors  UKSC 44 (27 October 2010)
Evidence of ‘Without Prejudice’ negotiations are now admissible to the Court when attempting to determine the true meaning of the terms of a Settlement Agreement.
A recent ruling of the Supreme Court has created a new exception to the rule on admissibility of ‘Without Prejudice’ correspondence.
The ‘Without Prejudice’ rule is a long-established legal principle that communications between parties in a dispute declared to be ‘Without Prejudice’ are not admissible as evidence. There are certain exceptions to the rule; most notably, the decision of Robert Walker LJ in Unilever plc v Procter & Gamble Co  All ER 783 which states that when the issue is whether ‘Without Prejudice’ communications have resulted in a concluded Compromise Agreement, they are then admissible in evidence.
Oceanbulk and TMT were involved in the trading of forward freight agreements. Oceanbulk invoiced TMT for approximately US$40.5 million which TMT failed to pay. The parties’ representatives and solicitors entered into ‘Without Prejudice’ settlement negotiations which were partly in writing and partly the result of two meetings. The parties entered into a written Settlement Agreement but Oceanbulk later sued for damages citing TMT’s failure to comply with the Agreement.
The parties agreed on the existence of the terms of the written Settlement Agreement but they disputed the true construction of one of its terms. The appeal centred on whether it was permissible to refer to anything written or said in the course of the ‘Without Prejudice’ negotiations in order to assist the Court when interpreting the Agreement.
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